Article Preview
Top1. Introduction
Industry 4.0 in audit started-off as electronic processing of data and grew based on the increased use of technology in accounting. General Electric was first to utilize computers in accounting in 1954, with very few accountants being able to use computers at the time (Senft et al., 2012). As development entered the profession, smaller computers were designed, and given the lesser prices of these new computer versions, a lot of companies were able to purchase it and train workers on electronic data processing. In 1968, the first accounting software generalized audit software (GAS) came into existence. Once developed, the apex accounting certification body in the U.S had eight accounting companies develop an audit framework. This was the book titled “Auditing & EDP” which details the use of computers in auditing was developed (Senft et al., 2012).
The buzzword, Industry 4.0, was introduced about a decade ago by the Deutsche government to represent the fourth industrial revolution (Alcácer and Cruz-Machado, 2019; Grieco et al., 2017; Lu, 2017; Motyl et al., 2017; Peruzzini et al., 2017). It refers to an era of improved efficiency brought forth by automation of the many aspects of manufacturing (Lu, 2017; Peruzzini et al., 2017), one in which the virtual and the real worlds are linked (Baena et al., 2017). Technology researchers and scholars alike have mostly viewed industry 4.0 as the meeting point between cyber and physical system units. This is due to its nature of merging diverse heterogeneous data and ideas into its processes in an optimized manner, using updated algorithms (Motyl et al., 2017; Peruzzini et al., 2017).
As the world moves towards a knowledge-based economy, technology is rapidly becoming a necessity and has found its way into human professional endeavours. The accounting profession is beginning to appreciate technology-oriented progress largely as a result of the speed and quality it offers (Tekbas, 2018). In a report published by Global Financial Integrity, Heydt (2020) emphasized the importance of auditing, stating that it is one aspect of accounting where speed and quality cannot be over-emphasized. As defined by Aghaei Chadegani (2011), auditing is the gathering of information that helps to validate the financial and non-financial standing of an organization (Aghaei Chadegani, 2011). Hence, it requires dependable, detailed and error-free processes, which feeds organizations with the right information needed to make appropriate decisions about their future. Such processes and results can only be offered with cutting-edge technology, such as those offered by artificial intelligence, blockchain, and big data analytics among other things. The present paper contributes to the literature by reviewing and discussing the role of technology in the field of auditing. Specifically, both academicians and auditors will be informed of the importance of computer-assisted technology such as artificial intelligence, blockchain technologies and big data-data mining approach in ensuring effective audit of firms.
Given the potentials of the fourth industrial revolution for accounting and auditing, there are challenges which also pose threats to continuous usage of its systems (Kruskopf et al., 2019). Figure 1 is a schematic representation of the current study.
Figure 1. Schematic representation of the current study
In figure 2, the potential relationship that could exist between industry 4.0 and some audit functions, if fully harnessed is also described. It shows the interconnectivity between aspects of Industry 4.0 and how they resolve common auditing challenges. Every aspect of Industry 4.0 as shown in the diagram below is able to independently resolve one or more challenges faced in a typical audit work (Alcácer and Cruz-Machado, 2019). It is important to note that beyond the aspects of auditing described on figure, there are several other areas where technology play crucial roles in the auditing process (Gepp et al, 2018).
Figure 2. Key aspects of Industry 4.0 in relation to audit functions (Author’s idea)